Near North cheated CTA: witness

Scammed agency out of $370,000 in commissions

(AP) -- Near North Insurance Brokerage Inc. allegedly scammed the Chicago Transit Authority out of about $370,000 in an insurance deal, according to federal court testimony.

David Brower, a former Near North employee, testified Thursdayin Michael Segal's racketeering and fraud trial that Near North wona contract in 2001 from the CTA to find the best insurance deal forthe agency's Blue Line reconstruction project.

The deal went to DMI Brokerage LLC, which was an affiliate ofNear North. That violated an agreement that Near North would onlyget a flat fee of $540,000 in the deal, prosecutors said.

Instead, Near North also received $370,000 in DMI Brokeragecommissions, Brower said.

On cross-examination, Brower said that what happened was wrong,but Near North also saved the CTA $4 million to $5 million bygetting competitive bids for the project.

The CTA terminated Near North's contract in 2001 after learningof the commissions, a spokeswoman said.

Also on Thursday, a paralegal for Near North said he completedcontinuing-education courses for Segal that were required yearlyfor Segal to keep his state broker's license.

Allen Jackson said in a grand jury appearance that he completedthe tests on Segal's behalf because he feared he would lose hisjob.

On Thursday he said a Near North lawyer told him "it would be agood opportunity for me to learn the insurance business."

The government contends that Segal looted more than $20 millionfrom the premium trust fund, which by law must be kept in reserve.

Attorneys for Segal and Near North insist no customers lostmoney or went without insurance coverage.